Business

Why Do Eric Schmidt, Sheryl Sandberg and Elon Musk Love Butte, Mont.?

The CEOs of the nation’s largest companies typically don’t have a reason to fly to Butte, Mont. But that’s where they are this week, a who’s who of corporate America, participating in the Montana Economic Development Summit, billed as an effort to “boost our state’s economy by finding Montana solutions for Montana jobs.”

That may sound like a regional concern, but the non-Montana titans of industry in attendance include Google CEO Eric Schmidt, Facebook COO Sheryl Sandberg, Tesla Motors CEO Elon Musk and many more, including executives from Ford, Boeing, Hewlett-Packard, ConocoPhillips, Oracle, FedEx and Delta Airlines. Sponsors of the event include even more behemoths, like Walmart, Pfizer, Pepsi, Microsoft, Nike, Lockheed Martin and dozens more.

How can a local Montana jobs summit attract the giants of American commerce, few of whom have any business interests in the state? Well, the convener of the event, Max Baucus, happens to chair the Senate Finance Committee, the key tax-writing panel in the upper chamber. And when he throws an event, nominally about “bringing jobs to Montana,” corporate America recognizes that this gives them another opportunity to dole out favors to the senator who wants to lead a massive rewriting of the nation’s tax laws, designed to lower corporate rates and allow companies to bring back money stashed overseas with impunity.

In fact, every corporation associated with the Montana Economic Development Summit has a stake in the tax reform debate, and most have officially lobbied for favorable treatment. Considering the tens of billions that these companies stand to gain if they are successful, a couple days in Butte doesn’t sound like such a bad trade.

Baucus inaugurated the jobs summit in 2000, but this year’s affair is significant because of the emphasis the Democrat has placed on tax reform. Baucus is retiring at the end of this term, and he clearly wants to use a sweeping tax bill to cement part of his legacy. In fact, Baucus isn’t shy about stating outright that his work on tax reform brought these luminaries to Butte this year.

But pitching the jobs summit as a “non-political” conference is a bit much. The event sponsors and keynote speakers represent almost the entire coalition pressuring Baucus for a corporate-friendly tax reform plan. Featured speaker Fred Smith runs FedEx, the delivery service, a company that paid an effective tax rate of 4.2% on $9.4 billion in total profits over the past five years, according to Citizens for Tax Justice. They sit on two coalitions that have led corporate lobbying efforts on tax reform — the Alliance for Competitive Taxation (ACT) and Reforming America’s Taxes Equitably (RATE). FedEx has spent $31 million on lobbying from 2011-2013.

Both ACT and RATE support a reduction in the corporate tax rate from 35% to 25%, which is supposed to be “paid for” by closures of loopholes. But the biggest loophole of all would be pried open with ACT’s plan for a “territorial” taxation system, exempting from taxation profits earned by U.S. multinationals overseas or simply booked offshore, and allowing corporations to repatriate offshore profits at a rate as low as single-digits. The Center on Budget and Policy Priorities believes such a system would create incentives for global corporations to move more of their operations overseas to avoid taxes, “hurting domestic businesses… and weakening the economy.”

This is, of course, the polar opposite of the stated goal of the Montana Economic Development Summit — to create good jobs in America, specifically Montana. But numerous sponsors of the Baucus conference are also members of these lobbying coalitions. ACT members sponsoring the summit include General Electric, Google, Nike, Oracle, Pepsi, Pfizer, UPS and Walmart; RATE members lending a hand to Baucus in Butte include Boeing, Ford, Lockheed Martin, Disney and Northrop Grumman.

In addition, several corporate trade groups are sponsors of Baucus’ conference, including PhRMA (the prescription drug lobby) and AHIP (the health insurance lobby), both of which know Baucus well from the health-care debate. Jim McNerney, the CEO of Boeing and a keynote speaker, also serves as the head of the Business Roundtable, a major industry lobbying group.

This looks like a form of soft corruption from a senator who wields enormous power. Tax reform has already generated an orgy of lobbying in Washington on what has thus far been an under-the-radar issue. But in this case, Big Business can donate to the “non-political” jobs summit and send their CEOs to speak there. It’s not technically called lobbying, but the man with as much power as anyone to lower their corporate tax rates will get to hear from them up-close, interact with them on the side, and generally welcome their efforts to boost the fortunes of his tax-reform pet project, an event Baucus has said he wants to continue after leaving the Senate. In fact, Baucus boasted to reporters that he would discuss tax reform with the many leaders on hand at the summit. This is less a jobs conference than a corporate-underwritten lobbying junket.

Predictably, most of the major speakers on Monday managed to hit the talking point that the best way to create jobs in Montana is to lower the taxes multinational corporations pay. FedEx CEO Fred Smith, for example, said, “If the people in this audience and the people of Montana and the people of the United States want to invigorate the American economy, there is a very straightforward path to do so and that is get with Sen. Max Baucus and reform the tax code.”

Others highlighted domestic energy production in Montana, home to part of the Bakken shale region, a burgeoning oil exploration site. ConocoPhillips CEO Ryan Lance said in his speech that the Keystone XL pipeline would be critical to carrying Bakken shale gas, along with Canadian tar sands oil, to market. TransCanada, the company behind the pipeline project, is also a sponsor of the Montana Economic Development Summit.

Obviously, getting Democrats and Republicans to agree to anything in Congress will be difficult, but with the whole of corporate America behind him, Baucus certainly has a running start. Moreover, Baucus gets to look like a statesman talking jobs for his constituents while achieving his real goals: a high-profile event that made business press headlines and brought more attention to his long-shot tax reform bid. And he added to his Rolodex those who might need the services of an influential ex-senator come next year, when he’s looking for work.

The 3,000 Montanans at the summit didn’t leave empty-handed either. From the stage, Baucus announced that another event sponsor, Blue Cross/Blue Shield of Montana, planned to open a new call center in Great Falls, bringing 100 to 150 jobs to the city. So in the midst of a staged event designed to build support for multi-billion-dollar tax breaks for the biggest corporations in America, at least a handful of Montanans can realize their dream of becoming customer service representatives.

In a public service announcement promoting the event, Baucus seemed to back off any responsibility to create jobs from the summit. “I’ll bring the big names to Montana. Then it’s your job to turn handshakes into Montana jobs,” Baucus says in the ad. I’m sure the senator would like to help out with that, but he’s presumably too busy compiling a corporate tax break wish list from the CEOs in attendance.

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